The securities regulator has approved the proposal of issuing above 26.04 million IPO shares by the Bashundhara Paper Mills to raise a capital worth Tk 2.0 billion under the book building method.
The approval to IPO (initial public offering) proposal came Tuesday at a meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC).
At Tuesday's meeting, the BSEC also approved the draft prospectus of IDLC Growth Fund, an open-end mutual fund.
As per the BSEC approval, Bashundhara Paper Mills will raise a capital worth Tk 2.0 billion issuing above 26.04 million ordinary shares.
Of 26.04 million shares, above 15.62 million shares will be issued to eligible investors (EIs) at the cut off price of Tk 80 each.
Earlier, on August 27 last the regulator allowed Bashundhara Paper Mills to discover cut off price of its shares to be sold to EIs.
Later, the cut off price of Tk 80 was determined through electronic bidding participated by EIs.
Remaining 10.41 million shares will be sold to general shareholders, including non-resident Bangladeshis, at 10 per cent discount on cut off price of Tk 80.
Bashundhara Paper Mills will use the IPO fund for buying machinery, equipment, raw materials and to pay bank loan and to meet up IPO expenses.
According to financial statement for the year ended on June 30, 2016, the company's net asset value (NAV) per share is of Tk 30.49, including revaluation reserve, whereas the value is of Tk 15.79 without revaluation reserve.
The weighted average of earnings per share (EPS) was Tk 1.46 for the year ended on June 30, 2016.
AAA Finance and Investment is acting as the issue manager of the company's IPO.
The BSEC also asked the EIs, who failed to give proper explanation for offering prices equal to cut off price or above at the bidding of Bashundhara Paper Mills, to describe as to why they would not be declared disqualified.
As per the BSEC approval, IDLC Growth Fund will go public with an initial size of Tk 500 million.
Of Tk 500 million, Tk 100 million will be collected from sponsor-directors, while remaining Tk 400 million will be collected by selling units of the MF.
The face value of the units of IDLC Growth fund is Tk 10 each.
IDLC Finance is the sponsor of IDLC Growth Fund, while IDLC Asset Management is the fund manager.
As per another BSEC decision, Wifang Securities, a DSE member, will have to pay a penalty worth Tk 0.3 million for providing margin loans against 'Z' category shares.
Habibur Rahman Securities and Stock & Bond, two members at DSE, will also have to pay a penalty worth Tk 0.1 million each for providing margin loan facility against 'Z' category companies.
